WE must now consider how the comparisons are affected when
our economies are at different phases of technical development,
as well as at different positions of the mechanisation frontier.

The analysis is somewhat complicated. Within any one
economy, in a golden age, the real-capital ratio and the rate of
profit remain constant through time, but as between one
economy and another differences in the real-capital ratio may
be due either to a different position of the mechanisation
frontier or to a different bias in technical knowledge as between
labour and capital.

THE CRITERION OF NEUTRALITY

A different phase of technical knowledge is shown in a
different spectrum of possible techniques. One phase of
knowledge is superior to another, at a given real-capital ratio,
if output per man is greater at that real-capital ratio. (One
spectrum may be superior to another at high ratios and inferior
at lower ratios. Then if each economy has developed technique along the lines suited to its own situation -- the one
with relative scarcity of labour having developed more capitalusing methods of production, and the one with relative scarcity
of capital having developed less capital-using methods -- we
cannot say in general which one is superior to the other.1)

There is no direct way of comparing the degree of mechanisation of techniques taken from spectra representing different

This is a question of very great importance for the so-called underdeveloped economies. They would do better by developing efficient methods
of using man-power than by imitating capital-using techniques evolved in
'advanced' economies which enjoy conditions of scarcity of labour.

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